[s-cars] Fw: VW/Porsche Merger = Auto Union!!!

[Wylie Bean]

Wylie Bean
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-----Original Message-----
From: "Eaton, Tim" <Tim.Eaton at audi.com>

Date: Thu, 13 Aug 2009 11:57:25 
Subject: FW: VW/Porsche Merger = Auto Union!!!


FYI...

 

VW, Porsche broadly agree on outline of sale

New group could be called Auto Union 


August 12, 2009 - 11:46 am ET 

HANOVER/STUTTGART (Reuters) -- Volkswagen and Porsche have broadly
agreed on details for a deal to combine their businesses, two VW
supervisory board members said.

The combined entity could eventually be called "Auto Union" and may be
led by VW CEO Martin Winterkorn.

Winterkorn has given assurances that Porsche would remain an independent
brand, just like premium carmaker Audi. Porsche would be the tenth brand
in the VW group joining marques such as Bentley, Skoda, Seat and truck
maker Scania.

VW is set to buy a stake of up to 49 percent in Porsche AG, the sports
car unit of family-owned Porsche Automobil Holding SE, the first step in
creating what VW has called an "integrated" automotive group by the end
of 2011.

"Questions over valuation have been resolved," one of the board members
told Reuters on Wednesday.

The partial sale of Porsche's sports car business, which analysts have
valued at between 8 billion and 11 billion euros, is set to be decided
at a VW supervisory board meeting on Thursday.

Porsche SE needs to repair its stretched balance sheet after its attempt
at a debt-financed buyout of VW, Europe's largest carmaker, backfired.

Porsche, which owns a stake of just above 50 percent in VW voting shares
and swap contracts to control around 20 percent VW stake, was forced to
abandon its stake-building earlier this year and negotiate a merger
instead. 

120B euros combined sales

Stuttgart-based Porsche ousted its chief executive, Wendelin Wiedeking,
in July and is working to pay down a debt pile of more than 10 billion
euros ($14.13 billion).

The amount VW will pay for Porsche could be adjusted following detailed
due diligence, said sources close to VW.

The combined company would generate more than 120 billion euros ($171
billion) in pro-forma annual revenue from the sale of nearly 6.4 million
vehicles, based on figures from the carmakers' past fiscal years.

At the same time as the VW-Porsche negotiations, the Gulf state of Qatar
is set to buy Porsche's package of derivatives, which are worth about 5
billion euros, a step designed to alleviate Porsche SE's debt.

The deal to sell the derivatives, which can be converted into a 17
percent stake in Volkswagen, "is almost home and dry," a banker familiar
with the matter said.

Porsche's controlling families have already approved plans for a capital
increase of at least 5 billion euros, involving ordinary and preferred
shares. 

Porsche could sell some voting shares to Qatar as part of the capital
increase, people familiar with the deal said. It remained unclear
whether Qatar would take voting shares in Porsche, in Volkswagen, or in
both.

Porsche has said it expected a pretax loss of up to 5 billion euros due
to write-downs on the value of Volkswagen stock hedges for the fiscal
year ended July 31.

VW's home state of Lower Saxony is expected to retain its blocking
minority stake.